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What is the rate of return on each bond

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Reference no: EM132991192

Question - One bond has a coupon rate of 7.6%, another a coupon rate of 9.3%. Both bonds pay interest annually, have 14-year maturities, and sell at a yield to maturity of 8.0%.

a. If their yields to maturity next year are still 8.0%, what is the rate of return on each bond?

b. Does the higher-coupon bond give a higher rate of return?

Reference no: EM132991192

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